ACTIVe to increase transparency and ease of doing business


The Indian Government has been implementing various measures for improving ease of doing business in India through simplifying process, deregulation and digitization. This has been resulted into pushing up rank for India from 100th to 77th among 190 countries.

To continue with the objective of 'Ease of Doing Business', the Ministry of Corporate Affairs (MCA) has unveiled Rule 25A to the Companies (Incorporation) Amendment Rules, 2019 vide notification dated February 21, 2019, namely, Active Company Tagging Identifies and Verification.

The new e-form INC22 A - ACTIVE introduced through Companies (Incorporation) Amendment Rules, will record the registered office of the Company along with the photo of the place with latitude and longitude where it has been situated. This is going to help the Indian Regulators to verify the existence of the place, resulting into to crack down Letter Box companies, which are mostly used for facilitating tax evasion, illegal activities. This can be counted as one of measures introduced by the Indian Govt. to tackle black money.

Summary of the Circular:

All companies incorporated before 31st December 2017, except the following companies as listed below, have to file e-Form INC22 ACTIVE with their registered address, on or before 25th April 2019.

Exemptions/Exclusion:

  1. Companies which have not filed the financial statements under section 137;
  2. Companies which have not filed its annual return under section 92;
  3. Companies which have been struck off or are under the process of striking off;
  4. Companies which are under process of the liquidation;
  5. Companies which are amalgamated;
  6. Companies which are dissolved

It means that the companies which are incorporated on or after 1st January 2018 are not required to file e-Form INC22 Active.

In case the company fails to file this form with MCA within the due date, such companies shall be marked as 'ACTIVE-non-compliant.' This will result in these companies not being allowed to file changes like

  • SH-07 (Change in the authorised capital);
  • PAS-03 (Chang in the paid up capital);
  • DIR-12 (Change in Director except cession);
  • INC-22 (Change in the Registered office);
  • INC -28 (Amalgamation, de-merger)

Conclusion:

It seems that the introduction of this amendatory rules will help MCA to clean the records of the registry, resulting into more transparency in the regulatory system, and hopefully create a robust and effective compliance mechanism to handle money laundering and other practices using corporate veil.


Shriya Vaidya 
on 28 February 2019
Published in Corporate Law
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